Rear Differential Leaking Oil and Making Grinding Noise????

I have a '96 4x4 4runner with the e-locker. My differential recently started leaking oil from the rear driver side and now it started making a grinding noise around that same side drum? Is my differential busted or has my seals and bearings gone bad? Anybody else have this problem or has had this problem? I have no idea what it could be because the car still drives and it just makes a nasty grinding noise.

Oil likely started leaking because your breather is plugged solid. Differential heats up when you're driving, pressure inside goes up unless your breather is working to relieve it, then gear oil gets pushed out through the weakest seal. Check out the breather... it sticks out approx 3/4" on the top side of your differential. When the gear lube leaked out (only one way for the lube to get out and that's through your sealed bearing), it has likely washed all the grease out of your bearing, leading to the noise.

Replace the breather with a threaded nipple, hose, and small inline filter run up to behind your gas filler door (Search for "extend differential breather". Lots of threads on here), replace your bearing and oil seal, and you should be good to go. Lots of threads here on bearing and seal replacements too.

I haven't had to replace mine yet, but I plan on getting the parts directly from Toyota when I do have to replace them. The seal is cheap $15-$20, and the bearings up here are $100 CAD from the dealer. I suspect you can get one in the US for $40-$50 though. Markup is terribly high up here.

PM Phil (Member name on here: Strap22). He can probably get you as good a price as you'll get anywhere.